Let me preface this whole spiel. It's a pm I sent to my adoptee, I Have A Dream that I decided to re-edit and post up on DV for general scrutiny/advice. Many of the ideas in here have been expressed before. Especially by the late BB or BillyBob.

Also, alot of the most successful LDers on this site, (far moreso than I,) use the more accepted style of reality checking. I can only assume that it works for a number of people, then. So, if you use the more conventional RC method I really don't think that "you are doing it wrong" even if I seem to present it that way. This is more for people new to LDing that want to hear a two sides of the RC discussion OR for people whom normal RCing does not seem to work.

There is a general consensus on how to do reality checks, and that it applies universally, that I think couldn't be more wrong. People think that if you do RCs throughout the day at regular intervals, then it will transfer into your sleep avatar and you will just magically think to do it out of habit. [The late BB brought this up on multiple occasions.]

There are three things wrong with this, I think.
A. When you are just going through the motions and doing an RC, even if it does happen to transfer in to a dream, then when the reality check fails you will likely just blow it off anyway. (I've done this before.) Will you put serious weight into something that you are just doing habitually anyway? If there is no reason to do an RC other than you haven't done one in a few minutes, there is no reason why the RC will seem very important in the dream. Especially since dream logic isn't particularly intro-spective anyway.
B. Many of your habits in the real world don't translate into the dream world. Especially the habits that require rational thought. Example, how often do you find yourself scratching your nose or rubbing your eyes throughout the day? Even blinking! You do this constantly, far more than you RC I assume, yet it rarely transfers into the dream. Thing is that blinking is a physical response to dry eyes. Doing an RC while awake can become nothing more than a mental response to thinking about lucidity. One doesn't need to blink while asleep, so it doesn't transfer over. And unless you are already lucid, one doesn't often think about lucidity while dreaming so THAT doesn't transfer over.
C. Okay, final problem. People's minds naturally run with dreams no matter how silly the dream is or how out of character the dream requires them to act. (Have you ever done something in a dream that you would consider morally irreversible in real life? Or listened to a dream version of a stupid band or watched a TV show that you actually hate?) The whole nature of dream control is to find ways to go against the flow of the dream. Likewise, the nature of lucid induction is to break this 'just run with it' mind-set so that you can get into your conscious train of thought. just arbitrarily doing RCs does nothing to change how you think or even what you think about, so the common application of reality checks is not conducive to the root goal of lucid induction.

Well then, what should RCs be used for and when should they be done? Reality checks can be a great tool for the lucid dreamer and for many LDers it is an absolute necessity. To maximize the usefulness of RCs they are not only a way to test whether or not you are in a dream, but they are also a great means to train your brain. It is far more successful to train your thinking to be more analytical and observant of those things which are out of place than to rely on some small chance of a randomly successful RC.

Reality checks should be done when you see something odd. More specifically, anytime you have to do a double take an RC should be done. Example, if you see what looks like a cat that turns out to be a shadow, or you see a stick that is actually a lizard, that is definitely a time to do an RC. Even if it's something unbased on your senses, like your sister says or does something out of character, that's a proper RC time. If you hear a fact that you are pretty sure is completely off OR see something occur which shouldn't seem like it should have happened do a reality check.

The exception to this is dream signs. Some people have things they always seem to see and do during dreams. If you see/do a dream sign, reality check even if it may seem normal. Also, waking is hte ultimate dream sign. So upon waking up you should RC so that you become immune to false awakenings.

Whenever you do an RC, you should think two thoughts.

1. Am I dreaming? This seems self explanatory, but without legitimately questioning your state of consciousness you are just going through the motions. You must be able to actually convince yourself that you may be asleep to train your mind. (You probably won’t be able to convince yourself if you are reality checking to something strange.)
2. If this check succeeds, I’m awake. If it fails, I’m asleep. This thought may seem to be implied, but trust me. Without clearly defining your dream goals you can easily forget why you are pinching your nose in the middle of a dream. Not considering FAs as being the same dream, becoming distracted is the number one cause of losing lucidity during a lucid, so you have to tell yourself how important the RC is, and how the results should be interpreted, before you do it!

How does this RC method bypass the three major pitfalls of RCing presented above? I'll show you.

A. This is easy. It's the potential problem of you blowing off your RC or forgetting about it half-way through in dream, remember? Not only do we bypass this flaw through the explicit thoughts we think, but through the fact that the RC inherently means something. (Rather than your reality checks being used randomly ninety-percent of the time.)
B. This problem, (of not remembering to do RCs during a dream,) is defeated as well since the RC style discussed above actually trains the mind and the reality check becomes much more than an empty habit.
C. This brought up the issue of your 'dream mind-set.' The 'go with the flow' attitude. Lucid inductions entire base stems from attempting to break this attitude, (just as dream control's basis comes from trying to reverse it.) The above reality check style is one step in addressing this 'attitude' via initiating analytical thinking with each and every RC. This analytical thinking should de-rail the 'dream mind-set' and set the framework for taking control of your dreams.